The fashion industry has been rocked by the recent changes to US import tariffs on goods produced in the People’s Republic of China. Indeed, many fear that the administrative and cost implications could rival those caused by the UK’s departure from the EU in 2021. With even less time to prepare, fashion brands are facing an increasingly uncertain future.
Read on to discover how the new legislation could affect fashion brands and some key strategies for adapting to these changes.
What will the new regulations mean for fashion brands?
The Trump administration’s amendments to US trade tariffs – including the removal of the de minimis exemption for Chinese imports – are already having an impact on brands. This is due to both the costs of the tariffs themselves (an extra, on-top-off 10% on goods such as apparel and technology) and the additional administrative burden that importers now have to deal with.
Previously, shipments below the de minimis threshold of $800 required a minimal clearance process, costing ‘between 5 and 10 cents per shipment’. With the removal of the de minimis exemption, this is no longer the case. All shipments will have to go through a full screening process, resulting in more friction, higher costs and potentially longer delivery lead times.
What will be the impacts on the wider fashion industry?
Beyond the immediate operational challenges, these regulatory changes could trigger major structural shifts in the fashion industry, both in the United States and globally. For example, with the removal of the exemption and the introduction of additional tariffs, fashion brands may need to rethink their supply chain strategies to offset rising costs.
This could include exploring alternative shipping methods, establishing US-based warehouses or relocating manufacturing to regions subject to lower tariffs and unaffected by the new regulations. As brands adapt, consumer behavior is also likely to change. Higher import costs may drive shoppers towards more affordable alternatives, such as second-hand and vintage fashion.
At the same time, demand for ‘Made in USA’ products is expected to increase as domestic production gains a competitive edge. This could accelerate the trend towards near-shoring and localized, more sustainable supply chains – while helping US-based brands to expand their market share as the price gap between domestically produced and imported goods narrows.
How are fashion brands responding to the changes?
In the past, e-commerce giants such as Shein and Temu certainly benefited from the de minimis rule to reduce the cost of importing into the US. In response to the changes, they’re increasingly looking to expand their US operations, diversify their supply chains and move to bulk fulfilment. This will help to reduce costs and their reliance on Chinese imports.
Given the increased costs for brands and the already thin margins common in the fashion industry, price hikes are another likely response following the end of duty-free de minimis shipments. However, these increases should be implemented sensitively – with a clear focus on added customer value – to avoid alienating budget-conscious shoppers.
Turning challenges into opportunities in a shifting market
The new U.S. trade regulations are a potential game-changer for the fashion industry, forcing brands to rethink supply chains, pricing and strategy. However, while the added costs and administrative headaches are a challenge, they also open the door to innovation for brands that are willing to adapt their sourcing and fulfilment practices.
With shifting consumer trends and domestic production already gaining momentum, the brands that respond quickly and strategically to the evolving US fashion landscape won’t just survive these changes – they’ll be able to turn them into an opportunity for continued growth.
